People are freaking out because of a Treasury Department post announcing that what is called the "employer mandate" component of the Affordable Care Act is being delayed for a year. This mandate is a provision that allows the government to penalize companies with more than 50 full-time employees that do not offer their employees insurance, with a $2,000 fine per employee (more specifics here). Opinionsarerolling in on what the delay means for the long-term success of the sweeping law; but how is this part of the insurance system currently working, and who will the delay affect?
A big chunk of the full-time workforce gets their insurance from large companies*
As of 2011, Nearly 63 million people work full-time for companies with 50 or more employees. Roughly 98 percent of those businesses offer their employees insurance (that number has basically held steady from 2006 through 2011, before and after the passage of Obamacare). The same year, only 63.7 percent of firms with less than 50 full-time employees offered insurance.
From 1997 to 2010, the number of workers that were offered health benefits from employers declined from 70.1 percent to 67.5 percent of the workforce.
Insurance at large firms may be more ubiquitous, but employees pay more of their premiums
The larger the firm, the more likely they are to offer multiple insurance plans and options to their employees (43 percent of firms with 25 to 99 employees offered more than one plan; 65 percent of companies with 1,000 or more employees did so). On the other hand, the larger the firm, the more likely they are to only partially cover employee premiums, as opposed to covering the entire premium, as more small firms do. For example, only 17 percent of companies with 1,000 employees cover full premiums, while 35 percent of companies with between one and 24 employees do so.
Well Before the Employer Mandate, All Employers Were Paring Back On Offering Health Insurance
From 1997 to 2010, the number of workers that were offered health benefits from employers declined from 70.1 percent to 67.5 percent of the workforce. Only firms with 1,000 or more employees have increased the percentage of employees to whom they offer coverage. The decline has been especially pronounced since the Great Recession, as one of the defining characteristics of the recovery has been the creation of far more part-time jobs than full-time. Employers don’t have to count part-time employees towards the ACA’s 50-employee threshold for the employer mandate provision, and provide insurance to a much lower percentage of those workers.
Firms Don’t Seem to Be Reducing Their Number of Full-Time Employees—Yet
Since the Affordable Care Act was passed, threats have been made by retailers and school districts that they would reduce employee hours or lay off workers to avoid the employer mandate, but the number of employees at companies with 50 or more employees has hovered between 14 and 16 million with no notable increase or decrease since 2010.
Is the Mandate a Solution to a Problem That Doesn’t Exist?
As mentioned, most large employers already offer insurance. But, despite the looming threat of a mandate that will punish large employers who do not offer employees affordable insurance, only 26 percent of respondents in one survey of employers with more than 1,000 workers expected their organization to offer insurance in 10 years. Given the rising costs of providing coverage, many are waiting to see if the public, state-based insurance exchanges that allow consumers to choose from strictly regulated, subsidized plans ends up being a cheaper alternative for their employees—an outcome many have warily pointed to as an unintended consequence of the Affordable Care Act.
*Unless otherwise indicated, these numbers come from the United States Census Bureau’s Survey of Income and Program Participation (and analyses of their numbers by the bureau itself and the Employer Benefits Research Institute), and the United States Department of Health and Human Services’ Medical Expenditure Panel Survey.